Extreme Early Retirement
Posted on January 29, 2008 - Filed Under Philosophy |
Read this.
Let me start this topic with this: the word "extreme" needs to be stricken from the English language as an adjective.
Extreme Sports
Extreme Jello
Extreme Diapers
Is there an end to what can be "extreme"?
People who retired from the rat race in their 30’s. Retire at 65? Forget that. No, these people scrimped and saved their 30’s away. Their model: live off the passive income from their "nest-eggs".
The first couple started off with a nice size savings account, which they have allowed to grow in a low-cost index fund. Their passive income is $24,000/year. Since they have "zero" debt, they live comfortably on $2000/month.
Respectable.
The other couple: forget it.
With $135,000, rolling around in a CD, they manage to live on $400/month. Why CD’s? They want "zero risk". The husband states "We like to sleep at night"
A few questions for the husband:
- Do you sleep on the floor? Because you certainly can’t afford a mattress.
- If a light bulb burns out, how do you afford a new one?
- For your anniversary: do you shop at the dollar store?
But one aspect needs to be singled out: these people are happy and regret not their decision for "extreme early retirement". With $135,000, if they can live on $400/month and are happy who am I to judge?
Unlike these clowns, who can’t retire with $4 million in the bank.
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Comments
4 Responses to “Extreme Early Retirement”
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My husband and I (we are both early 30s) are seriously thinking about downsizing our life and getting serious about retiring early. We figure if you subtract taxes, cost of living in a major city, work clothes, etc– we are working so hard, just for the priviledge of working hard. Why not live in a shack on a beach for $15,000 a year and get to play all day.
This is traditional retirement thinking. These couples live on so little and whittle away their principle in safe low yield investments.
Retirement doesn’t mean that you cannot spend 1-2 hours a day on work. I think that majority of people who invest these days expect their income and net worth to increase during their retirement years.
My online biz has averaged about $1k a month from home on 1 hour a day. Heck my blog is at $200/mo. That’s 50% of the second couple’s income.
Creating growing passive income that doesn’t diminish your savings is the way to go for retirement.
Christine, if downsizing your life and living off $15k per year makes you happy, then why not? What is grossly missing from the article is any kind of healthcare cost.
Kenric, agreed. The first couple in the article were growing their nest-egg through an index fund. That model is acceptable. But you’re right: starting a simple business could boost their income. The difference between “working for someone else” versus “working for myself” is a nice play.
How many people actually enter into “true” retirement these days? They will have to live off something, either via passive income or work part time.
Healthcare will definitely be a major contributor to your day-to-day living. That’s why it pays to be stay healthy.